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Tuesday, 06 September 11
INDONESIAS PROPOSED COAL EXPORT BAN MAY HAVE IMPACT ON THE INDIAN POWER SECTOR - DIPESH DIPU
.jpg) COALspot.com - This is a special interview about Indonesian proposed coal export ban by 2014, with Mr. Dipesh Dipu, Director of Deloitte Touche Tohmatsu, India.
The Indonesian government is currently in the process of drafting a new regulation that could ban the export of low-grade coal by January 12, 2014. This is likely to apply to coal below 5700 kcal/kg on air dried basis in value.
As of now Indonesia is producing around 150 million tons of coal with calorific value below 5700 GAD (according to chairman of Indonesian coal mining association). However by 2014, there are possibilities the total production of below 5700 GAD coal may reach more than 200 million per annum.
Will Indonesian coal export ban impact on the Indian fuel requirements?
The earlier grade of coal that was being considered for proposed ban has GCV of 5100 kcal/kg of less (adb), which can be comparable to 3800-4200 kcal/kg (arb) domestic coal available in India. This grade of coal has found favor in India primarily due to likely price advantage but economics of power generation based on such grade of imported coal may be a suspect. This considering that such grades of coal from Indonesia typically have high moisture content, which makes transportation cost per unit of energy generated higher. The quantum of the low grade of coal (<5100 kcal/kg adb) procured from Indonesia is likely to remain relatively low.
However, if the new definition of low grade coal is applied (<5700 kcal/kg adb), it may be reasonable to believe that such a ban may have impact on the Indian power sector as volumes in this grade of coal are expected to rise in the proportion of coal exports to India. Several of the acquisitions made by Indian power generation companies in Indonesia have been in coal blocks that will produce coal of this grade, and a blanket ban on the exports can jeopardize power plant development in India.
On the other hand, the domestic Indonesian market may not be prepared to consume all the coal mined of this grade in view of the power generation capacity addition plans in Indonesia. In such a case, the coal mine development is likely to be deferred. The Indonesian law makers may need to reconsider domestic market demand, investment climate in coal sector and impact of the legislation on the export revenues.
What is the alternative source for Indian power industry if the proposed coal export ban come into effect by 2014?
Indian power generation companies have been forced to look out for coal assets abroad due to the investment and regulatory environment within the country. India boasts of more than 110 billion tonnes of coal reserves, which largely fall within a 300 meters of depth. If the regulatory and investment environment is amended to allow greater participation of private sector Indian dependence on imports will be reduced.
However, for imports, India will continue to look at Indonesia, South Africa, Australia and newer destinations like Mozambique and Columbia. But these sources also have constraints, domestic demands in South Africa is likely to restrict quantum jump in exports out of South Africa. Indonesia has also proposed domestic market obligations. Mozambique may have infrastructure constraints for large volumes of coal being transported from Tete province to ports of Maputo, Ncala or Beira. Australian coal is of high quality but may have higher costs of mining and transport.
What would be the additional cost if Indian consumers switch their sourcing origin from Indonesia?
Indonesia has competitive advantage due to its geographical closeness. However, on a per tonne basis, assuming comparable quality, costs of transport may make marginal difference when compared with South Africa and Mozambique.
When compared to Australian coal, due to the high quality, cost of energy may well be comparable even though shipping costs are higher. Between Indonesian coal (5500 kcal/kg adb priced at USD 90 per tonne) and Australian coal (6500 kcal/kg adb priced at USD 120 per tonne), indicative variable cost difference of power generation may be about Indian Rupees 0.20 to 0.30 per kWh (electricity unit) in favor of Indonesian coal.
Will it affect Indian economy growth or this coal export ban is ignorable as India can easily identify alternative sources of fuel?
The magnitude of growth in power generation in India will necessarily mean that coal will remain the mainstay. Natural gas has had issues of availability. Nuclear plant development is facing socio-political challenge in view of the risks of technology failure. Development of hydel power has also faced issues of land acquisition, rehabilitation & resettlement apart from the technical issues of hydro-geological features. Renewable sources such as solar and wind generation are still projected to constitute a small portion of India power generation mix. Identifying an alternative source that can match coal in its accessibility, availability and affordability in the context of scale of capacity addition required in India is a challenge.
What is the Indian government's role on this issue, whether government has to come out with the solution such as easing Indian mining and environment law, open up mining for foreigners, G2G arrangement, etc…?
There is a need to look at domestic sources with pro-active and constructive approach and make all necessary legal and statutory amendments that make the resources available and mineable. Easing the regulations may not be one of such measures but making those regulations work in sync with each other in a time bound and predictable manner must certainly be.
There is certainly a case for opening the domestic coal sector for private participation, including independent miners, and for foreign participation so that newer technology and enhanced scale of operations are implemented in India. The regulation also needs to permit risk capital to come in for prospecting and exploration.
For imports the G2G relations can be leveraged to secure coal assets. India has good relationship with Indonesia and has also signed a tax treaty with Mozambique in 2010 which will facilitate investments. Government may also engage with these countries to ease exports to India and extend fiscal support to coal mining companies investing in mining and associated infrastructure development.
About Dipesh Dipu
Dipesh Dipu works as Director with Deloitte Touche Tohmatsu India Pvt. Ltd in the Energy and Resources consulting practice of the firm and anchors the Firm’s initiative in the mining and metals sectors.
He is a mining engineering graduate from Indian School of Mines and is a Chartered Financial Analyst (CFA). He has also done executive program in business management from Indian Institute of Management Calcutta. Dipesh has recently been awarded the Abheraj Baldota Gold Medal for the Young Mining Engineer of the Year 2007 by the Mining Engineers’ Association of India in recognition of his contributions in the improvement of mining industry in India.
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Tuesday, 26 July 22
CAP RUSSIA'S OIL PRICE NOW - PROJECT SYNDICATE
Though the price of oil has declined in recent weeks, it is still through the roof, filtering through to gasoline prices, and causing economic and ...
Tuesday, 26 July 22
WILL SOUTH AMERICA’S WINTER DEMAND DRAW LNG CARGOES AWAY FROM EUROPE? - ICIS
South America is now in the middle of its winter demand season. Last year the region increased its share of global LNG imports in winter, with Braz ...
Monday, 25 July 22
GLOBAL 2021 COAL-FIRED ELECTRICITY GENERATION SURGES TO RECORD HIGH - REUTERS
By contrast, mine output was still fractionally below the record set between 2012 and 2014 because older and less efficient coal generators have be ...
Saturday, 23 July 22
THE EU HAS BEEN REDUCING IMPORTS OF RUSSIAN REFINED OIL PRODUCTS SINCE MARCH - BANCHERO COSTA
The European Union could now ban the import and transit of fuel oil from Russia around six months ahead of the planned deadline, an EU official and ...
Saturday, 23 July 22
INDONESIA CONSIDERING SCRAPPING DOMESTIC SALES RULE FOR PALM OIL EXPORTS - REUTERS
Indonesia is considering removing a domestic sales requirement for palm oil exports because high inventories of the vegetable oil have been holding ...
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- South Luzon Thermal Energy Corporation
- Pendopo Energi Batubara - Indonesia
- SN Aboitiz Power Inc, Philippines
- Formosa Plastics Group - Taiwan
- IEA Clean Coal Centre - UK
- Medco Energi Mining Internasional
- Jindal Steel & Power Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Price Waterhouse Coopers - Russia
- Siam City Cement - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Carbofer General Trading SA - India
- Ambuja Cements Ltd - India
- CNBM International Corporation - China
- Sree Jayajothi Cements Limited - India
- PowerSource Philippines DevCo
- Therma Luzon, Inc, Philippines
- Australian Coal Association
- Barasentosa Lestari - Indonesia
- AsiaOL BioFuels Corp., Philippines
- San Jose City I Power Corp, Philippines
- Power Finance Corporation Ltd., India
- TNB Fuel Sdn Bhd - Malaysia
- Grasim Industreis Ltd - India
- Renaissance Capital - South Africa
- The Treasury - Australian Government
- Miang Besar Coal Terminal - Indonesia
- Attock Cement Pakistan Limited
- Meralco Power Generation, Philippines
- Oldendorff Carriers - Singapore
- Malabar Cements Ltd - India
- Parry Sugars Refinery, India
- GVK Power & Infra Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Banpu Public Company Limited - Thailand
- Coastal Gujarat Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Ministry of Transport, Egypt
- International Coal Ventures Pvt Ltd - India
- Eastern Coal Council - USA
- SMC Global Power, Philippines
- Anglo American - United Kingdom
- Bulk Trading Sa - Switzerland
- Indian Oil Corporation Limited
- Rashtriya Ispat Nigam Limited - India
- Meenaskhi Energy Private Limited - India
- Maheswari Brothers Coal Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Borneo Indobara - Indonesia
- Merrill Lynch Commodities Europe
- PNOC Exploration Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- SMG Consultants - Indonesia
- Agrawal Coal Company - India
- Wood Mackenzie - Singapore
- Vizag Seaport Private Limited - India
- Sarangani Energy Corporation, Philippines
- Chamber of Mines of South Africa
- Parliament of New Zealand
- Eastern Energy - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rio Tinto Coal - Australia
- Indonesian Coal Mining Association
- Karaikal Port Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Tata Chemicals Ltd - India
- Energy Link Ltd, New Zealand
- Indika Energy - Indonesia
- Indogreen Group - Indonesia
- CIMB Investment Bank - Malaysia
- Dalmia Cement Bharat India
- Ministry of Finance - Indonesia
- Mercator Lines Limited - India
- Bhushan Steel Limited - India
- New Zealand Coal & Carbon
- Leighton Contractors Pty Ltd - Australia
- Makarim & Taira - Indonesia
- White Energy Company Limited
- Lanco Infratech Ltd - India
- Aboitiz Power Corporation - Philippines
- Africa Commodities Group - South Africa
- Star Paper Mills Limited - India
- Thiess Contractors Indonesia
- Thai Mozambique Logistica
- Alfred C Toepfer International GmbH - Germany
- Mintek Dendrill Indonesia
- LBH Netherlands Bv - Netherlands
- Iligan Light & Power Inc, Philippines
- Orica Mining Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Planning Commission, India
- Heidelberg Cement - Germany
- GMR Energy Limited - India
- Marubeni Corporation - India
- Timah Investasi Mineral - Indoneisa
- Xindia Steels Limited - India
- Standard Chartered Bank - UAE
- Interocean Group of Companies - India
- Australian Commodity Traders Exchange
- Kepco SPC Power Corporation, Philippines
- Trasteel International SA, Italy
- Mjunction Services Limited - India
- The State Trading Corporation of India Ltd
- Intertek Mineral Services - Indonesia
- ASAPP Information Group - India
- Directorate General of MIneral and Coal - Indonesia
- Latin American Coal - Colombia
- Straits Asia Resources Limited - Singapore
- Antam Resourcindo - Indonesia
- European Bulk Services B.V. - Netherlands
- Uttam Galva Steels Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bank of Tokyo Mitsubishi UFJ Ltd
- Electricity Generating Authority of Thailand
- Videocon Industries ltd - India
- Semirara Mining Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- London Commodity Brokers - England
- PTC India Limited - India
- Central Java Power - Indonesia
- Independent Power Producers Association of India
- Port Waratah Coal Services - Australia
- Energy Development Corp, Philippines
- Aditya Birla Group - India
- Global Coal Blending Company Limited - Australia
- Gujarat Mineral Development Corp Ltd - India
- Sakthi Sugars Limited - India
- Indian Energy Exchange, India
- Directorate Of Revenue Intelligence - India
- Metalloyd Limited - United Kingdom
- Krishnapatnam Port Company Ltd. - India
- Coalindo Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Globalindo Alam Lestari - Indonesia
- India Bulls Power Limited - India
- Kaltim Prima Coal - Indonesia
- Altura Mining Limited, Indonesia
- Vedanta Resources Plc - India
- Indo Tambangraya Megah - Indonesia
- Economic Council, Georgia
- Georgia Ports Authority, United States
- Bhoruka Overseas - Indonesia
- Sojitz Corporation - Japan
- OPG Power Generation Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Mercuria Energy - Indonesia
- Goldman Sachs - Singapore
- Petron Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Jaiprakash Power Ventures ltd
- Chettinad Cement Corporation Ltd - India
- Edison Trading Spa - Italy
- Karbindo Abesyapradhi - Indoneisa
- Orica Australia Pty. Ltd.
- Asmin Koalindo Tuhup - Indonesia
- Kobexindo Tractors - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Electricity Authority, New Zealand
- McConnell Dowell - Australia
- Global Business Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Cement Manufacturers Association - India
- VISA Power Limited - India
- ICICI Bank Limited - India
- Madhucon Powers Ltd - India
- Global Green Power PLC Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Kartika Selabumi Mining - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Samtan Co., Ltd - South Korea
- Kumho Petrochemical, South Korea
- Baramulti Group, Indonesia
- Siam City Cement PLC, Thailand
- Commonwealth Bank - Australia
- Simpson Spence & Young - Indonesia
- Toyota Tsusho Corporation, Japan
- Deloitte Consulting - India
- Tamil Nadu electricity Board
- Neyveli Lignite Corporation Ltd, - India
- Bukit Makmur.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- Kideco Jaya Agung - Indonesia
- Wilmar Investment Holdings
- Bangladesh Power Developement Board
- Coal and Oil Company - UAE
- Larsen & Toubro Limited - India
- Singapore Mercantile Exchange
- Manunggal Multi Energi - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Binh Thuan Hamico - Vietnam
- Minerals Council of Australia
- Bahari Cakrawala Sebuku - Indonesia
- Riau Bara Harum - Indonesia
- Bayan Resources Tbk. - Indonesia
- Bhatia International Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Central Electricity Authority - India
- Savvy Resources Ltd - HongKong
- Romanian Commodities Exchange
- Petrochimia International Co. Ltd.- Taiwan
- MS Steel International - UAE
- Posco Energy - South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Bukit Baiduri Energy - Indonesia
- Sical Logistics Limited - India
- The University of Queensland
- Ministry of Mines - Canada
- Bharathi Cement Corporation - India
- Essar Steel Hazira Ltd - India
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